Quick overview

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Silver recorded a record intraday decline, and gold experienced its largest decline in forty years in a sharp reversal of the surge that drove prices to all-time highs. Gold experienced its largest intraday decline since the early 1980s, falling more than 12 percent to fall below $5,000 per ounce.

 

Silver fell as much as 36% as the selloff swept through the larger metals markets, a record intraday decline. In London, copper dropped 3.4 percent from its all-time high on Thursday.

A sell-off of commodity currencies, such as the Swedish krona and the Australian dollar, helped the dollar soar. Over the past year, investor demand for precious metals has reached record highs, shocking seasoned traders and causing extraordinary price volatility.

This picked up speed in January as investors flocked to the traditional safe havens amid worries about currency depreciation, the Federal Reserve’s independence, trade disputes, and geopolitical unrest.

The selloff on Friday, which surpassed the October decline, is the biggest shock to the rally. The dollar’s recovery following reports that the Trump administration was getting ready to nominate Kevin Warsh for Fed chair—a move that was subsequently confirmed—was what set it off.

Investors who had been hoarding metals after the US president indicated it would allow the currency weaken earlier were disheartened by the greenback’s surge.

Warsh is seen as the most formidable opponent of inflation among the finalists, which raises expectations of a monetary policy that would support the dollar and devalue bullion priced in US dollars. According to Aakash Doshi, global head of gold and metals strategy at State Street Investment Management, “Trump’s announcement of Warsh as his choice for the next Fed Chair has been a US dollar positive and precious metals negative.